Abstract: Investigating the role of digital technology in non-performing loans is crucial for China to prevent financial risks effectively. This analysis utilises the full-sample and advanced sub-sample methods, utilising quarterly data from the first quarter of 2010 to the fourth quarter of 2022, to examine the interplay between big data and non-performing loans, exploring whether big data serves as an innovative tool to reduce financial risks in China. The conclusions ascertain positive and adverse impacts exist from the big data index (BDI) to the non-performing loan ratio (NPLR). The negative effects point out that the accelerated development of big data technology promotes the reduction of financial risks and vice versa. However, the positive influence would refute this idea; the leading cause is that the economic situation might influence non-performing loans. Conversely, there is a negative effect of NPLR on BDI, highlighting that low NPLR accompanied by economic recovery might facilitate investors to invest in big data-related stocks. Under the background of the fourth industrial revolution and unstable international financial environment, this discussion would provide significant suggestions for China to mitigate non-performing loans by applying big data technology.

Keywords: big data; non-performing loans; time-varying; causal relation; China

JEL codes: O33, G38, C32

DOI: ...